Correlation Between Arcelik AS and Egeplast Ege

Can any of the company-specific risk be diversified away by investing in both Arcelik AS and Egeplast Ege at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arcelik AS and Egeplast Ege into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arcelik AS and Egeplast Ege Plastik, you can compare the effects of market volatilities on Arcelik AS and Egeplast Ege and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arcelik AS with a short position of Egeplast Ege. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcelik AS and Egeplast Ege.

Diversification Opportunities for Arcelik AS and Egeplast Ege

0.68

Correlation Coefficient

Arcelik AS  Egeplast Ege

Poor diversification

The 3 months correlation between Arcelik and Egeplast is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arcelik AS and Egeplast Ege Plastik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egeplast Ege Plastik and Arcelik AS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arcelik AS are associated (or correlated) with Egeplast Ege. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egeplast Ege Plastik has no effect on the direction of Arcelik AS i.e., Arcelik AS and Egeplast Ege go up and down completely randomly.

Pair Corralation between Arcelik AS and Egeplast Ege

Assuming the 90 days trading horizon Arcelik AS is expected to generate 3.11 times less return on investment than Egeplast Ege. But when comparing it to its historical volatility, Arcelik AS is 1.23 times less risky than Egeplast Ege. It trades about 0.12 of its potential returns per unit of risk. Egeplast Ege Plastik is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  649.00  in Egeplast Ege Plastik on February 6, 2024 and sell it today you would earn a total of  86.00  from holding Egeplast Ege Plastik or generate 13.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arcelik AS  vs.  Egeplast Ege Plastik

Arcelik AS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arcelik AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward-looking signals, Arcelik AS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Egeplast Ege Plastik

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Egeplast Ege Plastik are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Egeplast Ege demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcelik AS and Egeplast Ege

The main advantage of trading using opposite Arcelik AS and Egeplast Ege positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcelik AS position performs unexpectedly, Egeplast Ege can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Egeplast Ege will offset losses from the drop in Egeplast Ege's long position.

The idea behind Arcelik AS and Egeplast Ege Plastik pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.